EV Craze Alters Auto Industry Landscape: Rivian Now More Valuable Than Volkswagen, Lucid Overtakes Ford's Market Cap

The EV revolution has pushed to the forefront nimble pureplay electric vehicle startups that have managed to win investor confidence in huge measure. This is evident in the massive valuation some have built up even as the companies are yet to start or have just started commercial operations.

Rivian Leapfrogs Volkswagen: Shares of Rivian Automotive, Inc. RIVN, which debuted on Wall Street last week, have been on a tear.

The stock has more than doubled from the IPO price of $78 apiece in quick time. It closed higher in each of the five sessions following its high-profile debut Nov. 10.

The rally has put Rivian's market cap past German auto giant Volkswagen AG VWAGY. Rivian's valuation is currently at about $146.7 billion compared to Volkswagen's $140 billion. Rivian is now only behind EV pioneer Tesla, Inc. TSLA and Japanese auto giant Toyota Motor Corporation TM.

Rivian's product pipeline consists of RIT, an EV pickup truck, which it began delivering to customers in September. As of Oct. 30, the company produced 180 R1Ts and delivered 156 R1Ts, with the bulk of it going to the company's employees. At the end of October, it had preorders of about 55,400 R1Ts and R1Ss. It expects to fill the preorder backlog by the end of 2023.

As of now, Rivian is a pre-revenue company, while Volkswagen delivered 6.95 million vehicles in the nine months ended Sept. 30 and generated revenues of $211.19 billion.

Related Link: 2 Reasons Why Rivian Shares Are Spiking Higher

Lucid Overtakes Ford: Lucid Group, Inc. LCID, which began delivering its first vehicles in late October, has also seen its shares soar.

The company manufactures Lucid Air Dream Edition electric sedan that rivals Tesla's Model S vehicle. The Lucid Air sedan comes with a 113-kilowatt-hour battery, giving it a 520-mile EPA range compared to 415-mile for Tesla's Model S.

Lucid shares are tacking on a huge gain in reaction to its quarterly results. The company said it has over 17,000 reservations for its Air sedan, up from 13,000 through the third quarter. The company targets vehicle production of 20,000 units for 2022.

The strong rally has taken Lucid's market cap past legacy automaker Ford Motor Company F. Lucid is now the eighth most valued automaker overall.

What's Fueling Rally In EV Startups? The irrational exuberance in the shares of EV startups was rightly explained by Loup Funds Managing Partner Gene Munster.

While discussing Rivian's sky-high valuation, Munster said the rise of theme investing, of which EVs are especially intoxicating to investors, is partly responsible for the rally. The analyst also noted Rivian has reputed backers in the form of Ford and Amazon, Inc. AMZN.

"Putting it together, it's the fear of missing out that has further fueled the rise in RIVN shares," Munster said. He cautioned that it will take a couple of years for Rivian's production ramp to be validated.

Incidentally, Tesla CEO Elon Musk has in a couple of occasions expressed his criticism regarding the lofty valuations of these companies.

"These are strange days," Musk said in a tweet. He went on to question whether it's possible to get a valuation less than a billion dollars without shipping any cars.

Rivian shares rallied 15.1% to $172.01 and Lucid soared 23.7% to $55.52.